Lessons in Employment: A Tale of Two Countries

Unemployment levels are a concern for workers around the world, and perhaps none more so than the professionals in the highly competitive IT industry. But this economic measure is only half the story. What makes a country’s workforce employable, and what doesn’t? To figure this out, we should consider the cases of two nations who have been in the news a good deal lately for events that ultimately boil down to employment (or lack thereof).

The French Connection A few months ago, French Prime Minister Dominique de Villepin proposed a bill that would ease the restrictions on businesses to hire and fire workers during their first two years of employment. The new law was designed to help the 18- to 25-year-old age group of the French workforce, which has a 20-percent unemployment rate, find work. Employers in France are reluctant to take on younger workers because existing regulations make it difficult for companies to get rid of any employees they hire, even if they’re performing well below expectations.

The response of young people in France to this bill—ironically, its intended beneficiaries—was to hit the bricks. More than a million of them took to the streets of Paris to demonstrate against what they perceived to be an unjust law, evidently focusing more on the “fire” half of the hire-and-fire equation. These protests were seriously disruptive to the French economy, causing such severe delays and shutdowns in transportation and academic, financial and government institutions that Villepin and President Jacques Chirac retracted the bill.

The Boom in Mumbai Meanwhile, thousands of miles away in India, a completely different employment story is unfolding. Some of the largest corporations in the world—IT and otherwise—are sending representatives to that country to announce plans to recruit Indian workers by the thousands. The incentive? An abundance of quality labor at competitive prices. “The only thing that limits us in India is the speed at which we can recruit,” Microsoft founder Bill Gates said during a recent visit.

And the speed at which companies such as Microsoft, Dell and Cisco can recruit is getting a lot faster. There was a story in the news recently about Indian employment headhunters applying the same concepts found in so-called “speed dating” programs to new hires. Indian staffing services company TVA Infotech actually rented out a 20,000-seat basketball arena so that hundreds of job candidates could systematically shuffle through multiple employer booths in quick intervals. They literally can’t hire people fast enough in that country.

Conclusion Obviously, there’s a stark contrast between France and India in terms of employment. The main difference between the two isn’t the quality of the workforce—the average French worker is probably much better than the average Indian on paper, as professional knowledge and proficiency is distributed unevenly throughout the latter country. Yet Fortune 500 companies won’t be flocking to France anytime soon, in spite of the large numbers of skilled, educated and very available talent there.

The primary reason behind this disparity is the economic principle of liquidity. Like money, labor is a commodity, and the more fluid it is, the better. Businesses want to be able to move their assets around as freely as possible. As mentioned earlier, France has regulations that lock companies into employment agreements for the long term, and these can be extremely difficult to get out of. The country has essentially legislated job security, something that’s nice in principle, but bad for a dynamic free-market economy if taken to extremes. On the other hand, India has no such legislation.

Thus, the same principle that allows IT professionals to receive a fat paycheck today might cause them to lose their job tomorrow. Techies around the world should keep liquidity in mind as they assess their volatile industry.